South Korea Makes First Arrest and Prosecution in Meme Coin Rug Pull Case

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South Korean prosecutors have charged five people accused of running a rug pull on the Solana-based meme coin CATFI. The case marks the country’s first arrest and prosecution tied to a decentralized exchange scheme. Prosecutors said the group made roughly 400 million won, or about $260,000, in illicit profits. The scheme caused 900 million won (~$650,000) in losses across 256 investors. How the CATFI Scheme Worked Investigators named the surname Park as the main suspect. Park ran the “Eth Father” social media account, posing as an unrelated third party who recommended CATFI to followers. Park and his associates issued CATFI on Pump.fun, a Solana token launchpad, using about 10 million won in capital. The token was then listed on a decentralized exchange. The group relied on multiple wallets and circular trades to hide their control of the supply. CATFI’s price climbed roughly 1,001 times within 26 hours of listing before the operators sold off their holdings. About 6,000 buyers entered the trade. The collapse left 256 investors with combined losses of 900 million won, prosecutors said. The charges mark the first use of fraudulent trading provisions under Korea’s user protection law. The law took effect in July 2024. An earlier case under the same statute focused on market manipulation at a centralized exchange. This case is the first to target a decentralized exchange platform. Two suspects were detained and indicted, and one was charged without detention. Two accomplices face separate charges for helping the main suspect evade investigators. Seoul’s new investigative crime unit for virtual assets led the case. Solana has seen similar rug pulls before, but prosecutions tied to DEX activity have been rare. Prosecutors said they would respond firmly to schemes that erode market trust.

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